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Wednesday, November 30, 2011

NFL And Its Affiliates Will Get Millions In Tax Breaks From Super Bowl

Indianapolis Super Bowl organizers are continually touting the economic windfall Indianapolis will receive from hosting the 2012 Super Bowl. The tab to Indianapolis taxpayers for improvements and additional public safety expenditures to host the event, however, could top $25 million. Moreover, a special state tax exemption enacted especially to benefit the NFL and its affiliates (all 12 of them) for agreeing to play the 2012 Super Bowl at Lucas Oil Stadium will cost state and local governments tens of millions of dollars in lost revenues.

The Indiana Department of Revenue recently released a directive that details the breadth of the exclusion afforded the NFL for the Super Bowl. Among the taxes from which the NFL and its affiliates will receive an exemption include the following:

sales and use taxes

motor fuel taxes

auto rental tax

food and beverage tax

innkeeper's tax

county admissions tax

adjusted gross income tax

withholding taxes on salaries and wages

If you add the tax breaks all up, the NFL and its affiliates are receiving tax breaks reaching into the tens of millions of dollars. The NFL's income from the Super Bowl is likely well north of $1 billion, including $275 million in television ad revenues and an even larger sum for broadcasting rights. The winning team members will be paid about $4.4 million for the game, while the losing team will be paid half that amount. That's over $6.5 million in wages that will be exempt from state and local withholding taxes. The winning team is given 150 gold and diamond Super Bowl rings worth about $5,000 a piece, a total value of $750,000 that will be exempt from sales and use taxes.

None of the NFL employees working at the Super Bowl will be subject to withholding taxes on their salary and wages, and none of their nights spent in Indianapolis hotel rooms will be subject to Indianapolis' high combined innkeeper's and sales tax of nearly 20%. Cars they rent for use in Indianapolis will be exempt from the auto rental tax, and any gas they purchase for those rented vehicles will be exempt from motor fuel taxes. In addition to the large staff deployed to Indianapolis to put on the event, the NFL presumably picks up the hotel tab for the competing teams' players (53-team roster), coaches and staff, exempting their hotel rooms from those taxes. The CIB will lose at least $2 million in admissions taxes that would otherwise be collected from ticket sales to the game. Any money the NFL spends on lavish entertainment during Super Bowl events will be exempt from the 9% combined sales, food and beverages taxes.

I'm guessing when the host committee boasts about the economic impact hosting the Super Bowl next year had on the city and state when it's all done and said, the tax expenditures laid out in preparation for and conducting the major event and the panoply of taxes from which the NFL was exempted from paying won't be factored into that equation. That's just a hunch. It's something to chew on, though, as you consider the fact that the NFL generates about $9 billion in revenues annually for its billionaire team owners and pays multi-million dollar annual salaries to many of its players.

Here's a post I published back in 2007 when the tax break was first being considered.

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